Paylocity Holding (PCTY) 2 Feb 232023 Q2 Earnings call transcript

Company Profile

Participants

Ryan Glenn	CFO
Steve Beauchamp	Co-CEO
Toby Williams	President, Co-CEO
Alex Zukin	Wolfe Research
Alex Sklar	Raymond James
Arvind Ramnani	Piper Sandler
Brad Reback	Stifel
Daniel Jester	BMO
Jared Levine	Cowen
Jason Celino	KeyBanc
Mark Marcon	Baird
Matt Pfau	William Blair
Robert Simmons	D.A. Davidson
Samad Samana	Jefferies
Scott Berg	Needham & Company
Siti Panigrahi	Mizuho Group
Terry Tillman	Truist

Call transcript

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Operator

Hello, and thank you for standing by. Welcome to Paylocity Holding Corporation Second Quarter 2023 Fiscal Year Results. [Operator Instructions]

I would now like to hand the conference over to your speaker, Ryan Glenn.

You may begin, sir.

Ryan Glenn

to fiscal results December 'XX, welcome second for XX, and of quarter which afternoon, Paylocity's call earnings the XXXX. Good ended on Glenn, Ryan Chief Officer. I'm Financial Toby today And Steve joining the of call me Beauchamp on and Williams, co-CEOs Paylocity. are

results available discussing issued market XX website on for webcast the Today, A our this of under the in Relations our the next will press announced the tab. we call closed. replay be release after will Investor be days

that to today's results question-and-answer uncertainties, you including factors, Before statements statements. implied the beginning, caution cause to we and during remarks, session, results statements. the These by made must actual risks from could which statements numerous these forward-looking differ forward-looking contain or are subject important other

solely and materially differ forward-looking are present uncertainties the and risks statements the are to those can these cause results information that statements. projected in Also, based actual subject from to on

please for undertake Securities to our information, do not any filings any additional factors to other We the and statements. forward-looking risk therein the update with refer disclosures. For Commission duty Exchange and contained

of and the a with release, currently our tab Exchange course is reconciliation the the schedule the on available detailing Securities more believe of refer these are press we internally non-GAAP call, is filed financial there measures. during which Also, under We to certain that we Commission. Relations results Investor how located representative in our website business, paylocity.com measures will and and measure non-GAAP at today's

which unavailable effort. time a financial measure unreasonable measure this reconcile is forward-looking information financial GAAP the are without to directly to unable note the complete at comparable reconciliation needed to we any that Please is because non-GAAP

will to you'd and Raymond conference Institutional Executive Investor Orlando me in to attending schedule, the Conference the March be schedule Toby in the let on X if also Florida Conference events. Please Francisco of be regard at Stifel In us will on James know March any X time and X. like these upcoming attending our in March Summit on Tech with JMP San I

the me turn let Steve. that, With over call to

Steve Beauchamp

Ryan, Thank for second you thanks joining call. quarter to us our 'XX fiscal of earnings you, on and all

of coupled continued million. software of most value strong of excellent modern XX.X% execution, in providing with year revenue million guidance the and and QX top increased the growth end industry, was QX proposition or resulted in the exceeded by differentiated over Our guidance. Total $XX last year $XXX full our results

product year's strong is continued disparate in acquisition Our leveraging including of flexible solution low-code investments momentum of last sales Cloudsnap, business ongoing innovation, a integrating the result applications. for

serve fully their to better We provide are the clients to to into modern integrations accelerate software the and and the new employees. use technology Paylocity this cases have leveraging in suite industry of most the integrated role and Cloudsnap our

business systems. To key more and and dozen date, software across and other readily financial clients developed by other expense-related benefits, nearly HR data we next-gen sharing critical labor that and X their integrations ERP, to employee consistency data point-of-sale, our better experience across elements time allow

application Paylocity Paylocity the to low-code accelerated platform has helping and employee addition, the by of drive Cloudsnap's ecosystem. their In extensibility data at integration to of value center capabilities the the and incremental differentiation positioning clients platform,

unique We and the employee remote, realize our teams. continue in and strong as to value see for clients culture in solutions rates hybrid workforce in-office engaging modern attach experience a creating

our and clients year-over-year monthly have metrics, on centered utilization to allowed files, HCM creating our active a centralizing is ways basis. This that stretch post community users new and premium and video growth management team to sharing Community demonstrate automating beyond dynamic video use traditional our continue in functionality. announcements strong where reflected groups in employees their whose and application on features and

their videos within as of connect to mediums traditional clients e-mail. our engage number look to engaging grow overall with are than played the increasingly through created the and business offering premium faster Similarly, employees video than continue that and more

the and recognized was to recently commitment by HRIS product Grid continues the continued as Our number X all overall to the Paylocity be product in management parties to the Best GX's to Paylocity innovation Places overall third XXXX in management HR, Work award. be such we named management. in as HR recognized at including leader categories performance report, learning Winter success Similarly, XXXX market leader externally XX an in continues culture core several categories, strong systems, as and receive Built-in

to the like on would color the I call pass quarter. now Toby further provide to to

Toby Williams

Thanks, Steve.

and on QX seen driving as XX% and we strong focus our results continued have of these range than more Paylocity Our underlying across increasing fringe participation exit these to wide locations solutions rollout to employee as engagement. employee workforce a contributed their has This auto of with to in higher connection of X,XXX higher tenets an QX drive collaboration since again employee products evident modern directly once XX pandemic. increased to clients, that utilization dynamic engagement, dealer was the employees policies surveys, benefit of which survey across on led including updates the in

investments of their its furniture with are strong with this collaborate platform a communicate, the Paylocity peers. to engage has second recognize to half Combined mobile and outdoor for in suite, set QX software innovating ongoing an across with helped making up the fiscal to product contributed and over over of Similarly, we in employees broader and building 'XX. the X,XXX manufacturer strong app seen employees us the our sales modern industry execution commitment most XX%

interest continues of the result Reserve. rate interest on Federal to prior sustained client Consistent with increases a funds as from income rise the quarter,

of us, continue large back of drive we upside help market future portion a key in to front the this business opportunity the Given of reinvesting areas into growth.

will in our the to most in innovate software to continuing our marketing once suite new on annual in we continue payrolls, clients year-end and work the than of also the teams of tax to is invest and XXXXs implementation of federal, form new busy our and our our industry. and time platform as initiatives, operations state to deliver filings QX, which across more closely year clients. modern processing again, addition digital a of agencies further channel In with investments very This delivered incrementally XX% for local business and product they W-Xs,

want busy our I dedication during employees and this year. of our all time very, their thank to clients hard work for very to of

Ryan now guidance. provide I'd the to to results financial fiscal and in the 'XX pass updated to review detail like call

Ryan Glenn

XX.X% an the other guidance ahead Total revenue Toby. last second and of Thanks, with increase revenues $XX period million our and quarter was year $XXX XX.X% million, from midpoint. of recurring for same the up

as Our continue XX.X% operational XX.X% basis to our of last while on scaling in gross industry-leading fiscal, focus for was adjusted profit XXX of maintaining service QX leverage representing points costs, versus levels. we QX

R&D and what investments investment and and research our in capitalize. combine We continue both significant understand to to important we expense development make overall is to in what we

On the platform in investment throughout continue by to to 'XX a compared 'XX of needs serve dollar R&D when of the modern year-over-year we to Paylocity the as build R&D focused incremental fiscal fiscal quarter total basis, our out investments and second XX.X% on remain in increased workforce. the making we

focused marketing 'XX were of basis, on the this sales In on of second incremental non-GAAP in and fiscal revenue to regards XX.X% area our in to a making expenses annual business go-to-market we a the quarter, in an activities, investments drive were remain G&A versus G&A period our continued revenue XX.X% year, remain costs basis. leveraging growth. On the in in consistently same non-GAAP on and expenses second of basis, on we XX.X% the quarter last and focused

versus or margin guidance of was 'XX. adjusted Our second leverage and million by XX.X% XXX of EBITDA points million fiscal top basis for the end and of the exceeded $XX.X quarter represented $XX.X QX our

growth. our also leverage be and to by increased gross ability continue flow adjusted drive adjusted strong through cash EBITDA pleased maintaining while and to We margin, free profitability revenue

our GAAP covering results. Briefly

funds income, operating For cash and interest million income daily QX, $XXX.X million, client cash in client-held to million. funds and In QX. billion average of balance and outstanding. equivalents $XX.X In debt the profit million quarter sheet, gross the ended was $XX.X of $X.X regard with our and was regards income we to $XXX.X net was balance no was

an billion with of the points. approximately estimating basis will are yield QX approximately We XXX balance $X.X average be daily annual average in

$X.X a On estimating average balance be the will average daily are an with yield points. basis, billion we year full basis XXX approximately of

workforce only platform basis the in basis sequential guidance the month, of an levels, and increase was In number in the October, to and that a includes reminder, March. XX a interest January this rate on client modestly XX impact December regards our as November, employees on was flat on of a each sequential QX. up in in please point also client note and week's basis to points basis of Additionally, assumes increase up

Our to the guidance fiscal of the assumes client workforce flat for be levels year. remainder

for workforce levels assumes provide 'XX, this QX client guidance full and in back half no to like of year. I'd the Finally, our fiscal in further fiscal financial changes which

basis For growth revenue. XX% to range to 'XX, the and quarter be $XXX.X adjusted $XXX.X the total 'XX, expected leverage of quarter points expected over approximately revenue billion which the 'XX third is or $X.XXX to over adjusted revenue $XXX.X million 'XX. or of approximately expected growth 'XX, to of of represents is to million. And And year is $X.XXX million of in range EBITDA the million, range be total for over $XXX.X in $XXX.X third of the XXX to fiscal to be fiscal fiscal million expected is billion million in fiscal XX% fiscal total be to $XXX.X EBITDA in range

rule carried of back at guidance EBITDA revenue half 'XX. XX% adjusted free QX we annual revenue margins to an our have cash of gross firmly 'XX. basis. margin, are while in we approximately with and driving midpoint adjusted results and the fiscal history momentum growth strong remain fiscal conclusion, adjusted XX%, committed our our of the continuing pleased growth on of profitable in flow the of are EBITDA and In above we also XX fiscal the 'XX With We increasing

questions. Operator, we ready for now are

Operator

comes of from [Operator with the & Scott Company. Berg line Needham Instructions] Our first question

Scott Berg

I've maybe a software some We're expectations what last seeing little bit. of to companies you're Any relative got customer on quarter, adds little weakness year-to-date? your two SMB or terms focused bit here. of market vendors color from seeing a in in other the around

Steve Beauchamp

Yes. Sure, Scott.

about some first the selling season we've a raise and we momentum the I allowed had overall. So had of our sales to mentioned half that And Toby busy talking us year. in of think that really even significantly the good year

payroll an the we think is advantage do. I business, company something have HCM single every that being to has

data us, to all sell connect it being to to from using a and the rest solution suite payroll of the starts today. payroll For obviously the and be broader with able much

even also in we more success continued had new terms and of terms the had over couple selling success product we've in adding units, also out success called so last and as of of upmarket of And kind more we've calls.

Scott Berg

faster to follow-up -- your Got it. I mentioned from know least I called R&D some R&D is X about XX% going a That's your as on the to, accelerator revenue think gain as you're years your as rate I've you think last a times, is similar the then to your for to Helpful. the need think so step driving growth there's continue that Do innovation recently? some roughly don't now. expense product that right improvements over an maybe many company. I I out year-over-year. been know, had much leverage than preseason in And up because But question, have you hit product what And Or Ryan forward? at you win starting is over should manner we say. how financial opportunity investments

Steve Beauchamp

Yes.

always adding and combination our then the Scott, a of we've has number been customers new units, think, those got. I of landing products expanding that point

of revenue leverage terms the big have the as leverage I additional and technology. capabilities been point, to we there, look certainly for see that business natural think We there's to other investments our being to amount we never leverage to more growth in be for we close add of our elsewhere. the many fairly We a think viewed in intention not leverage as to suite products consistent product modern in opportunity places have big looking signaled we in any opportunities we and suite. And scale. revenue model fair a

the So as approach taken historically. think we've I same

Operator

Stifel. Our next Reback the with question Brad line comes from of

Brad Reback

per using opportunity sort just ways Steve, month? an there product forward in as employee use you customers about cases, to of talked going is for monetize beyond new new per the

Steve Beauchamp

Yes.

be we I as Brad. monetization using they're marketplace. Cloudsnap called with integrate think of to the automation perspective. for from run integrate additional We their valuable to to there us question, that that customers, could our an we have acquisition, that's a be business, ability opportunities. We view really in software great people the certainly the But really data our about their both out broader suite to

bit at the in providers that number marketplace. are of We the a seeing expand stages We're the to little that data very and continuing we of early leveraging have.

of I that But us revenue think I most revenue referral to all marketplace -- be well. leverage as Paylocity our be think opportunity So to to will to able has for don't be back some there's revenue of some to PPM. continue potentially our PPM, drive to

Brad Reback

That's HCM follow-up. great. customers the do lot And for adoption data of appreciable I a then across you higher of in have rates still nontraditional that of newer any retention these really consuming are these one products? products. yet quick it's know more curve sort early But on

Steve Beauchamp

and of the in does of retention. into small elements Quite how It advantage retention, frequency much service longer. and higher frankly, a translate the as is right? products take broader we've use who staying are their the to I there's But that bit employees goes a on terms of of The that segmented they higher suite overall, the based number number with have Yes. say that are us seen in both customers lot logging a we and then products, well. utilization utilization, difference. historically important customers would little really

Operator

Cowen. Our Bryan Bergin question the next from line of comes with

Jared Levine

This on Bryan. is for actually Jared Levine

terms through there the prospective In in of decision-making. was the change January environment, of client in XQ terms demand pace any or of

Steve Beauchamp

anyone to color. wants add if see that, else with start can I Yes.

core a I think raise year the pretty even the -- flexibility. been results very strong. the where are so to grow the the January even We and the demand continues really half the year able we They're of dealing really with suite clients our workforces. and Z and has more the capabilities, top-of-funnel for modern first both of into what post-COVID allowed That's season. seeing all video busy with happy resonating our are community, sales to market our larger in LMS, the down end marketplace. be the product, definitely activity our market, were to newer survey, hybrid selling obviously with in in environment marketplace us dealing Gen

far. success And would we to combination and we've had certainly of to so credit as that the our service differentiated so product

Jared Levine

period the in client view with of And Great. focus Okay. and client increasingly of become And generally ROI payback offerings terms your with your conversations? prospective average a then how has conversations, you client? period the payback do the typical the

Toby Williams

Yes.

a I maybe that ROI that so of of there different what be type automating market, -- in the with comes on would we're manual no offering think is points tasks the type otherwise modernization the of product, I folks. and there's couple mean, from this. that software appreciable an both for doubt

or of in can as certainly getting clients with on is and like beyond core to the industry from the but and is platform, breadth expand the core what engage with offering in the the and doing about pitch really that's from prop way. certainly that around really with we video all people I have or and prospect community towards what on focused the a to of workforce things fact from with LMS their we the suite, think ability standpoint differentiated Community though, set of employees with the HCM more standpoint the a modern do we're really Plus, that go we modern we're product things with modern proposition value talking client like with employees value a that we're deliver traditional a the getting suite, platform the that of core most payroll, what HCM engaging the into giving really to surveys the whether the that really the doing things index we're continue focusing

in or the that's beyond prospect how So ROI of we're client conversations those core conversation the I think really an types of market. having

Operator

the Truist. Terry Our comes next from line question with Tillman of

Terry Tillman

a my creative question I a dangerously then And are and have follow-up. flowing. guess I juices

and then been will and help benefit core companies this modern R&D. hearing a a for talked got and the about that capabilities, keep adding I'm about you've curious their is lot more quarters now of But software all management, talent number of platform glove what You those payroll, a HR aspirational business. I've vendor you idea clearly, of consolidation,

an go kind drive effort So video talent whether premium there going vendor after but a to not is just management to incremental shift suggesting of it's consolidation a the opportunity a community, tactical trying LMS playbook? logos, selling surveys, base to bundles, to almost or from really of have back kind I'm you're to new

Toby Williams

mean, I we're have motion feel perspective about. is our platform landing of from take been clients certainly what a so do suite, Yes, I that. tended the part No the units. a we And new we which doubt broader think Terry. that of good part onto as main has seeing of terms think about I go-to-market to in new the

your $XXX back though the had question, as full of where the to going think going expanded [XXX]. the time $XXX -- set over the we've we we have IPO today, product distinct from base for also product to at the sit set motion I a customer into

have have base, customer team back and into do sell I the opportunity a to we that mean we product dedicated does an that.

And and X reasonable what you've seen with from motion. that the us think more invest success think of So years course I over amount primarily of seen in I we've think a is, set up the I last back-to-base that.

Terry Tillman

secondary, to opportunistic, maybe more that's Okay. still but a be option. call future like maybe It sounds going

Toby Williams

put we terms that have, of logos go-to-market And I a relatively there front reflects bulk think I us. large of just that new low think the the just units. the new given landing sort out size I of our of in market and opportunity that's have we of of in think the relatively Well, motion share

Terry Tillman

Yes. Yes.

the guess the I hearing like furniture manufacturer. examples follow-up auto of And good. the dealership I Sounds is up on always then the question upmarket. and

As to employees you you of do X,XXX about you strategically up you opportunity to plus on little platform like you market? that how it’s could more continue the iterate share whether next upmarket bit keep pulled X have or your Or you feel think could a kind capabilities, years? the and what over higher in X getting

Steve Beauchamp

as build the XXX We’ve than we more sure. build then demand new from see Yes, we need. And more we average what that in kind really of product customers question. good happens as customers, is employees a ID more cocreator. live we on sized we our of we always of customers little customer get and we products, It’s on and the a focused technology our really think capabilities

features they so and product. request the to And enhance we continue

teams that of constantly that agile keep appeal gets of on feature the in product And building starts We and terms in top larger customers. an to product richer to the set. fashion,

we’ve capabilities, do to that to upmarket And as that, think quite to so see are of over they starting the about modules automation. differentiation starting moon, think beyond we they is frankly. our how where these some you’ve have time engage don’t newer seen what and even are talent added modern matured, going as We employees goes

and about or that we’re a increased just year target success the so, having in marketplace. We’ve market ago

very a just that, possible opportunity over in be got low share. stretches said, we’ve it’s is on I in market little more So that really what big we’re Toby time, market focused the but a that bit which would

so we our on possible. is focusing market on existing plan capturing in many target And customers

Operator

Our Mark Baird. Marcon next line from with comes of the question

Mark Marcon

a more of and in seeing bit remarks in to are can you you able terms the do the to common sales in you What are the Can that's add that Congratulations adding helping release. Toby, strong what new seeing with that dimensionality a productivity terms little are sales on some little perspective? from Steve, a talked regards bit that's before that about press of really of and And do weren't you you're just integrations how momentum. prepared getting you that now most CloudSnap clients? the quarter. a to

Steve Beauchamp

sure. Sure,

frequently. disparate do that with applications And we that had we API have. real-time of to of can marketplace the we've And we our in Mark, do data fashion perspective. larger clients kind that asked our get some providers a a employee where can more So that from connect certainly, an

applications for services table. On and enables also we've it faster side, team or may then got market API be takes really with bring integrations, that team that for real-time much the build to capabilities. while flip ready And using may have customers to team this who a doing quite you've got a not to vertical applications years. the they whose technical capabilities Cloudsnap low-code who's so the operate been those

configure on and can integrations we technology. more scalable basis much also they so faster, become using so go-forward much And that a

the And it can longer-term number landscape scalability. of market so gives increased for opens those us, it providers integrate and speed and us that of really we also for with up to integration

Mark Marcon

that you the describe does And upmarket Great. help mid-market? or more that. you would in how Or the

Steve Beauchamp

got upmarket But your across. system into the if clients into disparate love employees, even XX way are demanding well. their as you've accounting connection All Certainly, that definitely integration you'd system.

And don't set of applications across those we up downmarket application, have Using that that our scalability in to may us a of of well. quickly can really vertical ERP penetration Upmarket, get markets. necessarily horizontal relatively helps market so as vertical to Cloudsnap, find able portion customers. the be all broader scale to market integrations we terms

helpful I the target really So it's think entire across market.

Mark Marcon

Or what would be the And common so most common? you're are the that now? seeing most integrations ERP the

Steve Beauchamp

Yes.

are that, about changes. create you a We we applications supervisory lot perspective, workflow employees in even know the center I common broadly for think They So the people ERP But of speaking, and know at automation is at if about employee when a and the many portion organization you up they of information clients. power of that other the of accounting processes know workflows the be data certainly, key applications know it, most term, ends of being one integration. can hired. from kind an into and more the think a would areas

is great we're a systems amount in fair another example. applications, market point-of-sale another although of ERP, vertical So example, great demand seeing

we're so of Cloudsnap that amount demand a demand, and with about fair And fill capabilities. seeing we're excited

Mark Marcon

Okay. it's that Great. the right? for you follow-up can somewhere remind what XXX is, us on yield, basis the effective you And around the second just I'm And quarter. give the effective didn't Is it was yield sequential my float, then the points. on expectation first the extent give of And during quarter. terms the I'm a what wondering quarter seems in increase. float the just for little the us the to that third for did you conservative side. assuming

Ryan Glenn

Mark. take Sure, can I that one.

So or balance billion, basis X.X% and about first yield annual $X.X quarter daily was average the points. XXX was

right, had you points quarter, Second it yield. basis about XXX of

So up rate November you September and following saw that big Fed the increases. step

prepared about Third annual math annual to $X.X of as with outlined think in points held the I we're average fund in the fourth expecting billion plant yield billion a X.X% quarter funds there, quarter, you yield. if client X.X% and the XXX quarter, we of balance fourth in the remarks, do $X.X basis about

Operator

Samana Our question the Samad with Jefferies. line next comes of from

Samad Samana

first all revenue an times, Maybe numbers the into feet our rate. XQ the guidance, XQ it changing the kind XXs gives us world around at know F just one, is a about F right underneath but I think of growth implies early I peek recurring it kind and of low themselves. If

about Or the where is been that context COVID? thinking, just tougher? -- that we -- should well fans that it because comps momentum growing growth the was where we of of been above just especially to I'm of expect kind we're get to in big of And a the business. lot momentum and prior and guys business behind has how that, conservative macro? there's that. is You just Or is the think should have

Toby Williams

would half of everything of noise the handful over clear you I about quarters is we've get was of back pandemic the talked we that's to way of point in think and what that lot like now. and you to be a pre-COVID, was from operate fiscal that's this growth revenue year don't more the to until what in And start QX, to of certainly much about And this would a recurring guiding we're probably changed year if start profile. time, to had similar come of would the to rates see time in fiscal look performance I And in did the start COVID, think our related at the in think and thought has low which a were normalized you the point is that the invest to that comps So from some drive And philosophy the range with the what bigger then be I business in we growth side we back business -- the that business course particular able But guess out as that go I sort mid-XXs-ish about they the think perspective. I starting of growth in other talked to at XXs. continuing guidance prior and see. in last to business. were we

Ryan performance platform called perspective. some on sort really flat seeing I unpack are of an the out there, mean of that you we if employee from the dynamics

We of tailwind starting that starts have been has a to to flatten increases out. those continued so comp some that so -- and

relates which I think particular some it demand from we're any -- feel strong you we the these seeing made Steve as good, you're demand we think see I also reasonably about. been conservatism has macro. sales displaying think to good any don't a -- environment. a I don't any The perspective, to of execution have -- comments, continued

aware environment. have of from But macro We're a certainly perspective, continued the performance strong demand concerns. to a see

noise through in back talked over which to things get handful us quarters. about growth the comps, starting pretty see pre-pandemic you're some last of we've rates as normalizing we level QX to with how was think I the consistent that just in of is of the

Samad Samana

maybe a follow-up And Steve. Great. then you, for

access company's about you before more but some be out evolution just you HR you going giving obviously, primary to you've buyers should advocates -- maybe through gotten that? that in and is the How turn to not that budget I that dollars may of the allocate Or of have questions Is that you? organization. previously or the department? think of the getting inside to As about thought they're Are think different this. your department, able both we are to been a getting more

Steve Beauchamp

interesting It's question. an

we meaning the most and the your Historically, of have I think be an involve times, the typically part, probably much but we Head part HR it it's would your you CFO conversations would you for decision-making how more same, also I you're employees stayed CEOs of tell that very process. start engage from like at feedback. with how that as retention, would buyers off in drive and things we've how perspective. talking changes about approval driving gathering feedback you employees LMS, that when better had like making based you're CEO productivity

concept this So a engagement appeal does CEO. to really

people most asset of think important are You any company. the

And so the to high to we that drive think to ability employees still such CFO to onboard and the CEO. attract I although HR we've the proposition to is talent, key we've more I sure buyer the actual and got buyers, definitely think productivity conversations retention -- extended new make value are that access the

Operator

Raymond of Our Peterson next James. Brian question comes from with the line

Alex Sklar

the current This hiring big I Sklar Brian. know quarter rents quarter. is Alex a normally for

any there's last your what had if see relative quarters. of to laid plans to the hiring the out to margin you change want Just at couple

Steve Beauchamp

year-end. different Yes. bit I think you would say it's of little sales, it's a if department. really But post by

to hit frame. So time start as spring the we

up ramp next fiscal March to in things our month headcount. really up for and this ramping start planning and year we and sales start put process So that February

us. sometimes we So opportunistically, to bit ahead really get season we're but that start of hiring fairly in always is of can, head we when and off we a a do the early that, little

success a from retention in product perspective, great I that and group. think good really technology

we've be about the excited increase that time We're good really year-over-year You to into and investments need. for really pipeline the can there. And had in that be perspective here see we service there because from just organization. fully able deliver to customers to pretty went our staffed a they operations an it's the important year-end, to

to that's growth not develop the So looking the selling in feel and the really to people levels employee the value looking to we're space and expenses, good reduce promote proposition really and overall, but market, we a staffing continue in grow resonate. software talent company that about

been we've happy and attract retain So our with to ability really talent.

Alex Sklar

want up Terry's follow earlier. market also I on question to And

help terms you MRR you in a opportunities know, those the kind now metric, that's coming from or different pipeline? don't can of of curious, preferred if I'm percentage ago? So either but frame of I have your a year versus upmarket

Steve Beauchamp

don't Due of new XXX [indiscernible] still new XX, that's think necessarily specific kind our that apart break historically the traction any that revenue. we as The larger to majority we segment. those But for of get of certainly XX employees, over our growing are be look out to to to the market to quarters you recurring we annual And We've get success. continues several recurring of is if our end employees down really nicely. really capabilities. continue last called revenue, starting where by market the that customers

on, So from of really the still our the majority that beginning. core market think we about the revenue from focused coming

Operator

Matt of line the from comes question Pfau next with William Our Blair.

Matt Pfau

Great. Okay.

to a wanted into that just Anything in to of flat Or in growth labor one. the environment? what your that the to and base of this expected be to that, your ask within health flat. sort the read terms you is see and would customer more was comments I return a of employee base? Just normal customer on

Ryan Glenn

Sure, Matt. I can take that one.

guidance and of is that approach over of that quarter. to the a back way think time. again about philosophy we've the pandemic, think us, the start the you had if we've here of in the lot of what's we've to all period we've And been this taken done think there's uncertainty that Obviously, guided I front I

August year. and our As expansion July, the some since of balance in flat that's been a expectation I the tighter, for effectively up remarks, the and little the in levels workforce To other see bit fiscal things in modestly way. prepared we extent outlined have the get

client the good guidance perspective, base. have any closely within the we the that's of revenue environment. feel overall the a sort really but I and today, think where about the a impact and of sitting But sales to from selling think sits I And season not the great within range. continue feel likewise, watching here good demand about guidance coming a January, off obviously movement strong macro seen really

Operator

of from with Daniel Jester question the Our next comes BMO. line

Daniel Jester

pretty integrated My guess is platform. point, that is well into probably Blue Marvel at this the

for opportunities. potentially now You've got inorganic frees some internally Cloudsnap it out growth bandwidth there. guess I up

to how year the inorganic So Steve, would thinking Toby, love in of hear you're kind about ahead.

Toby Williams

that, two, just Cloudsnap. just about Dan, of from with that's earlier yes, doing comments what good those capabilities what around Steve that we terms put an the in think I mean, press release us I I giving some platform perspective. integration think the we're really certainly out made feel

that's happy the really add worked how been value the and able process. with that's so in out to And

the to process the would platform. made we any a do, that fully capabilities And from way Steve we platform XX quarter last that between that's take approach perspective. the we'll a in user on we processes XX in that of could the still and of then think a call which fully acquisition the something seamless data I Blue the our bring time into we're Marble and bake into spend think months perspective, the typical sort capabilities how from I comments anywhere of in flow integrating experience

teams the on and so feel the about that are so progress And still far. good working

to overall that continue the to interesting. be might bandwidth we acquisitions have at look Certainly,

on the capability ability remains be We viewpoint I and our view to the of tuck-in the point perspective. in think strategy that to that push of of, we that product technology-oriented prefer we've really might product-oriented next think case I acquisitions. by remains accelerate been, way develop advantage or as to always instances, a today. would taken largely also certain from that I to things smaller road think what's I would And that historically want product be the it out But the us, might strategic characterize case. map

Daniel Jester

And That's what one customers on look connected how could wondering your maybe overall a time. over Just today Paylocity? then you. the actually of kind that quick integration Got What of through to and -- just helpful. actually see an penetration have the integration. percent

Steve Beauchamp

know of variety of our wide off top that don't have customers lot of the integrations for I Yes. things. my head, quite a frankly. A

I integration so an so and So XXX(k) integration. point mentioned integration, another prior this you get forth. Benefits stuff, ERPs as would on be all into then and And of example,

a so leverage something imagine person, when number time, real to higher of opportunity there's create see engagement. way at have. an that opportunity and They that I know to think drive we that expand to we the they about about has will to in number integrations of that the time, really think X would future create want their it. enable And changes then of automation the a least have I client over workflow integrations the to people we have data of So every X capability. can where processes an I would levels to actually integration. And

is and viewpoint want people to they systems goal of our their all so the And business lever integrate that with data. That's clients, run that use we the objective. to

Operator

Our comes of Arvind Ramnani with next from Piper question Sandler. the line

Arvind Ramnani

employees of set engagement. results. making made about years is of on past intact few solution the and Good first more driving really question My your investments this kind have you over HCM

it. expect feed some data. down back of your they seeing Are road, the You're sort growth lot certainly in drive value longer some term? do And you collecting to in that you Are a may the to the revenue clients? able of data of

Steve Beauchamp

it's intelligence now of question. in kind years capabilities. learning, artificial machine a great several investing Yes, We've been for

do opportunities places, surfacing as in You see product that see our many we more already a different well. and few

index, workforce our platform. where they are clients, and customers modern based off we we our score our how in is one look engaged So across

we the have. we markets. the do score, higher employee retention know more vertical And that And they even the by

give they value how to more more product, start of we them the get the engine other on that they their hospitality of up, So behind ideas they can out the product. recommendation see And score's compare use then to hospitality. as going so starts to

We to even place lastly, would with, surface might a pretty place. they say recommendations to connect and intelligence also follow technologies surface just communicate, that's modernize opportunity every is another then continues we insights might to might employees being want learning. and community that And they But around another and module, to that suite single they artificial people that will to much want I our newer try want that. machine advance, to dashboards as that see another our in we leveraging technology this to certainly

Arvind Ramnani

like [indiscernible] Perfect. this point. stage? And is your it able And the help it to think this Like at drive of sort revenue could at like for you Or win rates? growth? this do you does data are

Steve Beauchamp

It's a good question.

of really Toby win rates market it's creating driving important such you I in as marketplace. have And huge in mentioned when the differentiation think that's a and think, differentiation. you've to a and earlier, got front opportunity, today, largely TAM it's I

immediate incorporate to more leveraging best That's implement see the clients the opportunity our organization, separate get have. I think products, more as products. see monetizable modern practices offerings separate that on able some have things the we sure I'm new to that and capability we can of we SKU new all be that the see being that least of like across engine, where for But recommendation component future at immediate we we new a than data we capabilities. in would launch not a charge these a capabilities. maybe

Arvind Ramnani

trying I I on I adoption, introduced for then followed Yes, patience that's was you think brain free years even and to when Paylocity monetize 'XX, introduce now. know appreciate first good approach. community, having it your XXXX, several in a I monetize

on employment questions. Just a quantify of growth couple is other of I comes at basically kind mean, much of this to One increased clients? you employment from levels, how your existing able quick are

in of at sort couple come from expansion how offset last over able pressures. has the employee like much But years, of know growth you have past, of I to kind outlined any of quantify existing the rate clients? employment your are you increases

Ryan Glenn

one. that take can I Arv. Sure,

years I Obviously, seen client over levels. growing movements think about or normal may you've you with so, X environment period with X a you normalized workforce get if think ways. point, last a X in GDP, in the significant a maybe both

outsized bled you sequential we about growth double-digit talked month 'XX improvements. quarters, a recurring and over every total summer fiscal you've think spring single the we fiscal of of nearly XXXX, of a we from and revenue towards the I to that as reasonable look that saw to And I pandemic, of a revenue those were been back impact 'XX about tailwind you then into think over anchor on we time. recurring in 'XX. if again, each seen way And has the all period that at up talked where if

half about year, as a quarter. earlier, bit of the little point there's year-over-year, you Toby's To the the back in third of still tailwind here think fiscal a

to anniversaried handful kind As of the that XXs of we've and so continue we client have to sit all fiscal the we about levels confidence years. 'XX, around lot to or seen to revenue back think fourth of last the get of over go-to-market low you get motion I drive ability recurring employment get as And workforce continue think And our and normalized XX% we've environment. that a as to fully here growth. really quarter, improvements back to that you more plus

Operator

comes Our question next Alex with Wolfe the Research. from line of Zukin

Alex Zukin

I'm you tick the starting collar get constant questions them the we been employment of at have strength in kind from lot about white or levels sure the is some point, commentary, to of look direction you investors, recession the look at record too and A I guess here. other we've at get had but of one particularly you from headlines, asked,

any change logos. customer Samad cycle in It kind your in question seeing in in new base times your you're not asked even sounds customers, really of about numbers, not any seeing your for employment sales this QX around you're conservatism. levels change like

I But you decipher able perspective get some is just also on economy? just serving the of of anticipating -- SMB that it's you that you resiliency guess, that to a or -- the guys maybe reason how versus or you macro to larger been recurring of to level is is the business. from you're would as a And seeing mix share serve revenue that from on resiliency that further would type impact just there line. that that love there gives that. in market Or be perspective a when your customers clarity have either why client

Steve Beauchamp

Sure.

but to about reducing still COVID. of in industry, But are and people I number still I've their growth jobs we're lot think, There's environment. relatively and a whole have certainly, headline out news, this lumpiness part, post been different career, low been a seen the in obviously, the workforces, the this you there levels. are cycles. there, my there me So unemployment interesting really is of And cycle still a

work I the say next, lot X The people hybrid there's terms the to country. of from to being being would a to other from work, next, thing to is resilience from anywhere moving of in X job industry able able in move home the

these GDP little at trails from trailing growing a to decline it's also usually quickly I white-collar is And I from maybe it's overall, react declining force And when is bit, at can a history look bit, seen demand, going we've labor GDP. little relatively percentage so as jobs. If longer-term shifts a employment little bit as think in the you a the said, basis.

can through. sense couple you that, those I've in historically. before a makes what several numbers of all months headlines, flat been seen it But based think we've unemployment way see sometimes frankly, employment of the levels. for to of if And all And on take terms months me you

to going Now that certainly continue. doesn't that's that, mean

relatively quickly environment of where of of job the environment amount for move guidance year. kind the next a But people there's one remote can of our forecasted think in the on have fair We employment to work. flat rise rest resilience type this I of a from the because

Alex Zukin

sales It's it X it's have a basis, first growth with effectively investment front-loaded on is great the clients. -- anticipate and guess half of actually look able because to about meaningfully your but your when mobility, that of that of are if of the interesting total years, it this of the the -- of some I recurring this it of rate when kind to growth ahead first umbrella, guess, and growth specifically, sales level comps. that we I kind question as X at and -- rewards that your which like clients loses of year-over-year start last kind haven't growth of explanation. marketing the OpEx -- does in revenue kind tougher your quarter of year, makes greater of growth, up other ahead reaping what a ability the revenue to labor they'll the you look we those what aligned about at extent, marketing one and pop when couple I maybe think to for anniversary-ing -- is we you I in invest you other greater really a the is, super been do sense somebody at That's right your you simple almost super unique some not in think overinvest, if invest do durability, able you're driving make particularly

Toby Williams

the I felt think of about demand last mean say is heard over very environment. quarters consistently I good over Yes. the we -- handful us what you've pretty

relatively continue We having growth about opportunity in good us on market. to. of felt front really the a low We of share based very large

is think into overall would marketing been and in add headcount strategy we of on the fiscal XX% our digital an year ongoing this and in staffing us. to with sales to against for along business what sales in new given continue half continued I about we of channels, continue think to And growth-driving this is form a areas been motion -- a lot marketing, perspective, the continued and can, which basis continue product, of of areas business one an of and that I the what perspective, where progress the you're really big the year good think invest think to channel in our and plus I first our came certainly levels seeing message being has sort certainly is and from And those feeling support has to in talent the headcount drive initiatives, in strategy. from that marketing, that business. we sales of marketing in I in sales the of

historically. you've us we've continue year, so just I seen with there first the think how in to of And the consistent incrementally invest half described it pretty

Ryan Glenn

so about we've we've we and Sales historically focused investing to and fiscal speak, And areas where I'd talked talked about add that what so. financial think and years, marketing we Alex, revenue see is about -- offsetting you over Toby scale leverage playbook, the which on can R&D, to the there, also consistently this in you referenced. that, drive if just And several across continued this year. do our or just you're seeing growth continue to and

of really really And and both of quarter sales think leverage EBITDA in investing over gross if quarter, margin So marketing year-to-date, allows G&A incrementally, XXX adjusted drive an points year-to-date. us this I basis strong leverage perspective leverage this you in this that while all R&D. and strong and it quarter, add from to together,

that So strong driving. really to in about growth I good feel revenue addition combination the we're

Operator

Siti Mizuho comes the question line Group. next of Our with from Panigrahi

Siti Panigrahi

platform. within growth So you about talked your employee

So when incremental the PEPM that incremental you look revenue, versus new your revenue installed cross-selling customer increasing what like products from base? percentage of at recurring come new within

Toby Williams

attributable revenue perspective logo to is a growth from see you what acquisition. new of majority vast The

certainly but We bigger the and continues of of opportunity it's see of bigger that into has of basis, do smaller So that certainly to it still it the still the for of We the case year base, our the sales first relative important certainly in the result a new And be on new that time, half that -- pursued we products new to clients. still and have quarter. opportunity selling part talked about, and as the gotten, part introduced smaller customer the had more part it. continue acquisition. new back a a sell logo invest through to us. we've revenue, over in certainly we've sure overall and is It's this go-to-market the is, to motion the

Siti Panigrahi

terms And to then questions client of earlier follow-up employee in Great. a employment growth.

this industries. You have vertical of industry, including services, financial and to collar multiple tech exposure some white

what's Like collar mix? exposure white your to your and what's tech industry? So

Ryan Glenn

of particular There's Yes, And pretty our or industries think far close clients is X% anywhere sector. think no out to our other to various under-indexed point, revenue. breadth as as XX,XXX-plus clients, nothing as across tech any call your I'd Siti, I particular the to nearly you over I client think of significant. about being representing

U.S. average employees, I think call space SMB of composition the to XXX-plus nothing that our similar out that pretty There's client across that would note. particular the having look is I'd

Operator

D.A. Robert Our next of question Davidson. comes with from Simmons the line

Robert Simmons

about And fiscal I client so How year? you what far year you talk built was up retention. wondering that if guidance? held has have this into your

Toby Williams

Yes.

last service an And retention when to to on the with able our far, to handful industry busiest rates in think being been that retention us the few factor And a key have we to busiest talked perspective. of the we last the operations during and through that overall huge rate think an the for course other record-high us it. over through client of of years, how provided as service level pandemic strong. period we've industry. in over contributor the time rates of that's think is continues I clients able happy be be time So think that points mean about perspective. the I high time retention say needed difficult us with serve been case. It's to in data I would a X-year consistent our I highest a being And pretty still overall seen has continued came effectively clients January and our for I really quarters the January seeing they from service have overall, I sort the really a from the see differentiating we've and a last us we're company, the

Operator

from line comes the next of question Celino Jason Our KeyBanc. with

Jason Celino

things, like kind it environment pretty summarize of sounds still If strong. to were the demand I is

how really would you you is it's I in But maybe and we visibility say front to executing your guide pre-COVID? well. You're about versus what's know of you. how when think visibility changed of kind today

Toby Williams

I'm sure. not

Steve Beauchamp

jumped ahead you of Sorry, Toby, there. I

a And you the fact revenue perspective, I model new our recurring is revenue new visibility existing the start. year revenue saying recurring the of me that customers. being a retaining part by as would then big and overlay along. Let and our start just from goes customers

that only it about year, greater part Obviously, stage, get season. as quarters of huge left. a we this go visibility X think At being to So our in along January we did know selling last quarter retention decent we new into the because visibility of certainly rates pretty than business. significant we we've got pipeline have what better and are our visibility we and look

that the think, like ago it's And versus and business at we're at I don't of of now, of so maybe I size years think, though, got. just X scale that or pre-COVID, this there's we've a benefits, the visibility. X model different X level

inherent from. we're just where think driving the it's business more I revenue model and in the

Operator

like Ladies Steve turn that would and Q&A I session. call gentlemen, to remarks. for to closing our now concludes the back

Steve Beauchamp

thank want just take a and work quick all I a of all busy to Everyone, Paylocity. Yes. Paylocity of their for great effort moment very your hard you year-end. interest for over to everyone thank a in course, have at And evening.

Operator

for your Ladies and you gentlemen, this participation. concludes today's Thank conference call.

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